Property Manager · New Orleans, LA · Member since 2013 · 184 posts · 34 votes
Hey BP!
I am purchasing a park that has management already in place. This management team has been in place for 9 months under the previous owner and has done a good job cleaning up the park. Currently, the PM fee is a flat rate of $700/month. There are 13 active lots and 42 more to fill.
My question is, how much should I anticipate paying them as we grow? The $700 flat fee tight now is excessive I feel. Should we pay per pad? Percentage of rent collected?
Rental Property Investor · Charlotte, NC · Member since 2018 · 76 posts · 49 votes
6y
@Michael Baradell, that makes sense. While on a percentage basis of rents the fee might seem high, it's more about the absolute dollar amount at this revenue level. The time and effort spent by a third party manager could easily exceed the $700/month. With that said, once you get occupancy up, the management fee should revert to a more normalized percentage of revenues. I would expect >10% but haven't explored third party management. We do all of it in house.
Rental Property Investor · Green Bay, WI · Member since 2016 · 19 posts · 11 votes
6y
@Michael Baradell I’ve traditionally seen an on site manager getting free lot rent plus about $10/pad/month. Probably will vary based on how much they are doing day to day, but this is a good starting point. $700/month seems large to me with the low occupancy. I would try to drop that down (maybe free lot rent and $150/mn) and then pay them a bonus for each of your vacant units that they help sell or rent.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
6y
@Michael Baradell Interesting to hear about a flat fee. I haven't seen that. Most of the parks I know of do either salary or an hourly rate. If you feel that the PM is doing a good job, I don't think you should lower what you pay them right now. If they leave, then you're stuck looking around for a new PM. You may want to look into providing a commission for filling the empty lots. Talk to the PM to see what you can do to work a pay schedule that works for both of you. Best of luck!
Rental Property Investor · Charlotte, NC · Member since 2018 · 76 posts · 49 votes
6y
@Michael Baradell, that makes sense. While on a percentage basis of rents the fee might seem high, it's more about the absolute dollar amount at this revenue level. The time and effort spent by a third party manager could easily exceed the $700/month. With that said, once you get occupancy up, the management fee should revert to a more normalized percentage of revenues. I would expect >10% but haven't explored third party management. We do all of it in house.
Investor · Charleston, SC · Member since 2015 · 113 posts · 50 votes
6y
@Michael Baradell the flat fee is fine depending on the value the PM brings, your plans and how helpful and active the PM is in getting your goals accomplished. If you're moving quickly filling vacant pads there is a lot of ground work on permits and coordinating set up. Probably have to pay the PM more for the added work. Once the home is ready the manager will be filling with a tenant etc... I would never have an issue paying a PM based on the value they bring. The issue I've run into several times is, the PM doesn't bring enough value to justify the expense.